Commentary and musings on the complex, fascinating and peculiar world that is securities regulation

Thursday, June 26, 2014

Justice Ginsburg Short Concurring Opinion is Mouse that Roared in Halliburton

The very short concurring opinion of Justice Ginsburg in the Supreme Court's Halliburton opinion looms very large, given that the opinion was joined by Justices Sotomajor and Breyer and the Court's opinion by Chief Justice Roberts and joined by Justices Kennedy and Kagan does not have a majority without it. This means that the concurring opinion tempers the Court's ruling endorsing the fraud on the market presumption of reliance in securities fraud cases announced in the 1988 Basic, Inc. v. Levinson opinion, but with the injection of the company's ability to inject price impact showings at the class certification stage. Three Justices, Scalia, Thomas and Alito, would have flatly reversed the Basic Inc. ruling.

The Ginsburg concurrence Justices joined the Court's opinion, making six votes to endorse the Basic presumption of reliance based only on the understanding that the opinion would impose no heavy toll on securities fraud plaintiffs with tenable claims and that it is incumbent on the defendant to show price impact. Basic has survived because of this concurring opinion and so respect must be paid to it. It has become part of the Court's ruling.